WELLINGTON: The New Zealand dollar bounced back from three-year low as traders look ahead to the US Federal Reserve’s policy meeting and a announcement from the Reserve Bank to establish support for the high yielding currency.
The kiwi traded at 74.26 US cents at about 5pm in Wellington, little changed from on Monday, having earlier touched 73.94 cents, its lowest level since November 2011.
The trade-weighted index declined to 76.75 from 76.92 on Monday.
The US Dollar Index is near its highest levels in more than a decade and sentiment for the greenback will rise further if the Federal Open Market Committee signals scope to raise interest rates from near zero this year.
The US dollar has gained amid signs the world’s biggest economy is picking up, while the kiwi will face the twin forces of the FOMC and the Reserve Bank, which may flag little reason to hike interest rates with tame inflation.
The kiwi ‘is in a little bit of a holding pattern until the back end of the week,’ said Alex Hill, head of corporate FX at NZ Forex.
